Fed will conduct new round of stress tests on U.S. banks

The second-ranking member of the Federal Reserve said the central bank will conduct a fourth round of stress tests in the coming weeks to determine if U.S. banks can withstand a recession.

Vice Chairman Janet Yellen said Friday that the tests are necessary because of the increased downside risks that Europe’s debt crisis poses to the U.S. economy and financial markets. She made the comments during a speech at the Federal Reserve Bank of Chicago.

The Fed oversees Wall Street’s biggest banks, including Citigroup, Bank of America, JPMorgan Chase & Co., and Wells Fargo. The Fed has performed periodic stress tests on the 19 banks it watches since 2009.

France reacts with outrage to S&P downgrading error

France reacted with outrage after the Standard & Poor’s ratings agency accidentally sent out a message saying it was downgrading France’s prized “AAA” credit rating during a tumultuous week in Europe’s protracted debt crisis.

Germany and the European Commission also bristled Friday, warning ratings agencies to act responsibly and underscoring European unease over the power they wield over governments.

The error stood for an hour and a half Thursday while the United States and most European markets were open before it was corrected by the agency — spooking investors by foreshadowing an event that would rock the 17-nation eurozone.

The accident came just as Greece and Italy seemed to be getting on the right track by establishing new interim governments led by financial experts who might guide them out of the continent’s debt crisis.

French Finance Minister Francois Baroin did his best to quell fears, calling the error a “rather shocking rumor of information that has no foundation.”

“We won’t let any negative message go,” he said in Lyon in comments seen Friday on the La Tribune newspaper’s website.

British music company EMI being sold for $4.1 billion

EMI Group Ltd., the iconic British music company that is home to The Beatles, Coldplay and Katy Perry, is being split and sold for $4.1 billion.

The deals will open EMI’s buyers, Universal Music and Sony/ATV, to regulatory scrutiny as they increase their dominance of the music industry.

Universal Music Group said Friday that it will pay $1.9 billion for the recording division, joining Universal artists including Lady Gaga and Eminem with EMI superstars such as David Guetta and Lady Antebellum.

A consortium led by Sony/ATV reached a separate deal to pay $2.2 billion for EMI’s publishing division, according to a person familiar with the matter. That business is in charge of songwriting copyrights for artists such as Rihanna and Adele. The person wasn’t authorized to speak publicly and spoke on condition of anonymity.

Sony/ATV, a joint venture between Sony Corp. and the Michael Jackson estate, is a 38 percent partner in the consortium.